GAO Sustains Protest to Best Value Trade Off Where Agency Only Considers “Outstanding” Proposals, Without Weighing Price/Non-Price Factors

The federal government contracting solicitation, proposal, and selection processes are something that all federal government contractors should strive to know. These methods, found in FAR parts 14 and 15, respectively, can be boiled down to two methods: sealed bidding and contracting by negotiation. Contracting by negotiation can occur either through a competitive award or a sole source award. When used effectively, the parts of the FAR clue contractors into the methods that agencies use to evaluate proposals and can help contractors tailor their proposals to better target agencies’ needs, thereby increasing chances of award. Of particular importance is the method an agency will use to evaluate proposals, and the weight given to technical components of the proposal against the weight given to price. In KPMG LLP, B-420949 (Nov. 7, 2022), GAO takes a look at how agencies evaluate technical proposals and price, and how those evaluations work together in a best-value tradeoff decision.

Contracting by negotiation via competitive awards is likely the method most used by agencies when soliciting products or services, and it is without a doubt the method that we see come across our desks most often here at KMP.  As mentioned above, competitive awards are evaluated by either a tradeoff process, where the agency weighs price against the technical evaluation, and lowest price technically acceptable, where price is more important than technical evaluation, so long as the offeror meets the requirements of the solicitation. However, the solicitation in KPMG LLP was unclear, as it called for evaluation of proposals using both a “highest technically rated offeror with a fair and reasonable price and a best-value tradeoff method.” (emphasis added). These two methods are mutually exclusive because “highest technically rated offeror with a fair and reasonable price” means a higher priced proposal may receive the award because the “technical factor is significantly more important than price,” while the best-value tradeoff weights the benefits in the technical evaluation with the price.

After evaluation of all proposals, KPMG was notified that it was not a successful offeror due to a weakness assessed for concluding that KPMG’s inclusion of a particular data platform increased its risk of unsuccessful performance because the “acquisition spans more than the current … data platform.” Because of this weakness, KPMG protested on three grounds: the agency’s evaluation of its technical proposal, the agency’s price reasonableness evaluation, and its best-value tradeoff decision.

Now, anyone who has even slightly considered protesting an agency’s best-value tradeoff evaluation knows that agencies are given broad discretion when reviewing technical proposals, and it has been long-established that GAO will not look at technical proposals with intent to reevaluate. Instead, GAO solely looks at the agency’s evaluation to determine that the evaluation was “reasonable and consistent with the solicitation’s evaluation criteria and with procurement statutes and regulations.” For protestors, this means that GAO will not sustain a protest simply because the protester doesn’t agree with the agency’s determination. Further, a protest challenging the terms of the solicitation filed anytime after the date proposals are due will be dismissed as untimely. So, while there may have been grounds prior to the solicitation deadline due to the “patent ambiguity,” the GAO denied the protest’s first and second grounds because the unchallenged ambiguity meant the agency could use either evaluation method mentioned in the solicitation.

However, when GAO looked further into the method the agency used, which was the best-value tradeoff method, it determined that the agency improperly performed the best-value tradeoff. The agency eliminated all offerors who received a technical evaluation lower than “outstanding” when choosing what offers would receive awards. The use of a best-value tradeoff requires weighing price and non-price factors to determine if the non-price factors justify the higher price. If the agency makes an award to a higher-priced offer that is technically superior to a lower-priced but acceptable one, the agency must support that decision with an explanation of how the higher-priced offer is technically superior and why it is worth the higher price. Here, because the agency eliminated all offerors rated below “outstanding,” and did not take price into consideration beyond deeming the offerors’ proposals “reasonable, realistic, and balanced,” no best-value tradeoff occurred, and offerors received awards based solely on the adjectival rating of “outstanding,” a practice that is prohibited under the FAR and prior GAO decisions.

In the end, GAO determined that the agency’s lack of a true best-value tradeoff was unreasonable and prejudiced offerors, and recommended the agency perform and document a new source selection decision, and terminate any of the awards made if the outcome ends in a different result.

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